Vidnyan Sawant, AVP - Technical Research at GEPL Capital
For last five weeks, the Nifty50 has been making lower top lower bottom formation and in previous three weeks it has sustained below its 20 week SMA (simple moving average of 17,260) which shows bearish sentiments of the index.
On daily charts, the Nifty has faced strong resistance at 200 day SMA (17,242) for last 8 days indicating negative undertone of the market.
On the indicator front, the RSI (relative strength index) plotted on the weekly charts is sustaining below 50 mark which shows lack of momentum.
The Nifty has immediate resistance at 17,260 & 17,440 followed by 17,800 levels. The downside support for the index is placed at 16,555 followed by 16,000 levels.
We feel that the Nifty is in bearish mode. If the Nifty breaches 16,555 levels then it will move towards 16,000 mark in coming days. The bearish view will be negated if it sustains above 17,260 mark.
Here are three buy calls for next 2-3 weeks:
Tata Chemicals: Buy | LTP: Rs 1,046.30 | Stop-Loss: Rs 970 | Target: Rs 1,223 | Return: 17 percent
Tata Chemicals is trading at 7 month high levels and maintaining higher top higher bottom formation on the weekly charts. We witnessed a volume pickup at every rise in a stock price which shows strong bullish undertone of the stock.
On the daily charts, every time the stock has taken strong support with a minor whipsaw at 200 day SMA and bounceback indicating long term positive strength of the stock.
On the indicator front, the RSI plotted on the weekly timeframe has sustained above the 60 mark with a higher top higher bottom pattern, indicating increasing bullish momentum in the prices.
Going ahead, we expect the prices to move at higher levels towards Rs 1,158 after which we might see a move towards Rs 1,223 levels.
We recommend a stop-loss of Rs 970 on a daily closing basis.
Power Grid Corporation of India: Buy | LTP: Rs 233.75 | Stop-Loss: Rs 220 | Target: Rs 269 | Return: 15 percent
Power Grid has made fresh life time highs this week and is sustaining at higher levels which shows strong strength of the stock. On the weekly charts the stock has been taking support at 20 week SMA since November 2020 indicating bullish undertone for the medium to long term.
On the daily chart, the stock has formed CIP formation (Change in Polarity) at Rs 220 levels and moved up.
On the indicator front, the RSI plotted on the weekly chart can be seen above the 65 mark and moving higher, indicating increasing bullish momentum in the prices.
Going ahead we might see the prices move higher towards the Rs 254 mark. If the prices manage to sustain above the Rs 254 mark we might see further upmove towards Rs 269 level.
We recommend a strict stop-loss of Rs 220 on a daily closing basis.
NLC India: Buy | LTP: Rs 87.70 | Stop-Loss: Rs 78 | Target: Rs 120 | Return: 37 percent
NLC India is giving a strong breakout of saucer pattern which has been forming since October 2018 with volume. The stock has been sustaining above 20 week SMA with minor whipsaws since July 2020 which indicates strong positive sentiments for the medium to long term.
The RSI indicator plotted on the weekly charts is sustaining above the 65 mark and moving upwards indicating positive momentum.
We expect the stock to move higher towards Rs 100 and if it manages to cross above Rs 100 then eventually it will move towards Rs 120 levels.
One should maintain a strict stop-loss of Rs 78 on a daily closing basis for this trade.
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